CA_Principles_08[1]

CA_Principles_08[1] - Principles of California Real Estate...

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1 Lesson 8: Real Estate Agency Law Principles of California Real Estate Definitions » Agency relationship : When one person authorizes another to represent her (subject to controls) in dealings with third parties. Agency Relationship » Seller or buyer hires a broker to act as representative (agent) in a real estate transaction. » Many transactions involve more than one agency relationship: Each party may have agent. Transaction may also involve salesperson working (as agent) for broker
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2 Agency Relationship » A salesperson isn’t licensed to represent sellers or buyers directly, without a broker. Agency relationship with buyer or seller in a real estate transaction is always with the broker, not salesperson. However, since salesperson is broker’s agent, duties to clients are similar. Agency Law » Agency relationship has important legal consequences for both parties: 1.Dealing with agent is usually legal equivalent of dealing with principal. 2. Agent owes legal duties to principal. » Agency law governs relationships and agent’s powers and duties. » Applies to agency relationships between: lawyer and client trustee and beneficiary real estate agent and seller or buyer real estate agent and landlord or tenant Agency Law
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3 Creating an Agency Relationship » Agency duties and liabilities arise automatically when relationship created. » Under agency law, relationship can be created by: express agreement ratification estoppel implication Creating an Agency Relationship Express agreement » Express agreement: Principal chooses someone to act as agent, and agent agrees. Most agencies created by express agreement. For example: § listing agreement § buyer agency agreement § power of attorney » Express agency agreement must meet some—but not all—requirements for valid contract: mutual consent competent parties lawful purpose Creating an Agency Relationship Express agreement
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4 » Express agency agreement does require: mutual consent competent parties lawful purposes » Agreement does not require: consideration written agreement (although always best) Creating an Agency Relationship Express agreement » Although valid agency agreement can be created with oral agreement, broker can’t sue client for compensation without written agreement. » Agency relationship begins as soon as parties agree. Creating an Agency Relationship Express agreement Creating an Agency Relationship Ratification » Agency by ratification : Principal gives approval, after the fact , to acts performed by: a person without authority to represent principal, or an agent whose actions exceed granted authority.
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Creating an Agency Relationship Ratification » Principal may ratify agency by: expressly approving unauthorized acts or accepting benefits of unauthorized acts » Agency by estoppel : Created when it would be unfair to a third party to deny the agency, because the principal allowed third party to believe actions were authorized.
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This note was uploaded on 09/06/2011 for the course FI 365 taught by Professor Staff during the Spring '11 term at S.F. State.

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CA_Principles_08[1] - Principles of California Real Estate...

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